Intellectual property (IP) in Indonesia: What should EU businesses know?

Indonesia is the largest economy in the South-East Asian region. It accounts for about one-third of the region's GDP and has the largest population with 270 million people in 2020. The bilateral trade in goods between the EU and Indonesia are EUR 20.6 billion in 2020 of which EU exports worth EUR 7.2 billion and EU imports worth EUR 13.3 billion. The EU is Indonesia's fifth largest trading partner while Indonesia is the 31st global trading partner for the EU (details here).

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The EU is in the process of negotiating a Free Trade Agreement (FTA) to facilitate and improve new market access with Indonesia, increase trade between the two countries and encourage direct investment. The negotiations were officially launched on 18 July 2016 and 11 rounds have been held so far (details here). In the proposal the EU submitted to Indonesia (intended as a basis for discussion), there is a chapter dedicated to IP. The key objectives of the chapter are to foster improvements in IP protection and decrease counterfeiting and piracy issues in Indonesia (details here).

Are you a European company doing business in Indonesia?  Check out the free advisory IP services offered by the IP SME Helpdesk.

Currently, IP protection remains challenging in Indonesia and businesses intending to safely enter the local market should be aware of this.

Indonesia is near China, which is considered to be the largest manufacturer of counterfeit products in the world. This proximity allows a huge number of counterfeit items from China to be shipped to and sold in the Indonesian market. Alongside this, the large number of fake products that are locally produced/packaged is also cause for concern.

In recent years, Indonesian consumers have become more familiar with online shopping. The Covid-19 pandemic has driven more people to use e-commerce sites and social media channels (Facebook, WhatsApp, Instagram, TikTok,  etc.) to make purchases. The European Commission recently released its Counterfeit and Piracy Watch List; three of the top e-commerce sites (Tokopedia, Bukalapak and Shopee) operating in Indonesia  are mentioned in the watch list . They allegedly sell high volumes of counterfeit products, in areas such as electronics, clothing, fashion, accessories, books, films, mobile phones, cars, spare motor parts and industrial goods. The proactive measures for filtering and detecting infringing offers on the above-mentioned sites seem to be ineffective, and their processes for removing counterfeit listings are still unreasonably long.

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Due to the lack of specific regulations in Indonesia for effectively governing digital trading environments, counterfeiters and criminals have flooded the online market with a huge number of fake products that violate IP rights. In addition to this, if an IP owner does not have a valid IP registration in Indonesia, asking the authorities to take action against these infringing activities is very difficult.

RELATED: Check out the Guide on how to remove counterfeit goods from e-commerce sites in South-East Asia.

In Indonesia, the IP registration system follows the ‘first-to-file’ principle. Whoever files an application to register IP first, gets priority. This, unfortunately, opens the door for bad-faith registration practices. The majority of bad-faith registration cases are related to trade marks. Third parties – such as a trade mark squatters or local companies – can quickly file an application for a foreign company’s trade mark before the real owner does so. When they have successfully registered the trade mark, they can use it to mislead consumers by taking advantage of its established reputation. Or they offer to sell it back to the owner for a very high price. With this in mind, EU businesses should register their IP as soon as they plan to expand to Indonesia.

It is worth noting that, in order to register IP in Indonesia, foreign companies are required to file the application through a local specialised representative if they don’t have an office in the country. The Indonesian Directorate General of Intellectual Property (DGIP) officially launched a new, mandatory e-filing system in 2019. Their online services are becoming more and more efficient and now cover almost all aspects of the registration process: from searching or filing to the post-filing of patents, trade marks, designs and copyrights. Further registration information can be found on their official website: https://dgip.go.id/.

Alternatively, EU companies may consider using the following international routes for facilitating IP registration in Indonesia:

• The Patent Cooperation Treaty (PCT)  helps applicants seeking international patent protection. By filing one international patent application under the PCT, applicants can simultaneously seek protection for an invention in 154 contracting countries (listed here). For more information on how the PCT system works, please refer to our PCT Guide here.

• The International Trademark System – Madrid System  is  a convenient and cost-effective solution for registering and managing trade marks worldwide. Under the Madrid System, you can file just one single application in one language through your home IP office, and pay one set of official fees, to seek trade mark protection in up to 125 countries. To learn more about the Madrid System, check out our guide here.  

Are you a European company seeking to register your trade mark, patent or design in Indonesia? Check out our Indonesia IP country factsheet.

Where to get IP support?

The  South-East Asia IP SME Helpdesk is an EU initiative that provides free, practical IP advice to European SMEs in relation to 10 South-East Asian countries. EU companies can send questions to questionsoutheastasia-iprhelpdesk [dot] eu (question[at]southeastasia-iprhelpdesk[dot]eu) and will receive replies within 3 working days.

Written by Xuan Nguyen, SEA IP SME Helpdesk